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83% of over 55's can't get a homeloan


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https://www.msn.com/en-gb/money/other/is-there-are-mortgage-crisis-for-british-pensioners-new-data-show-83-of-homeowners-over-55-who-need-one-cant-get-a-homeloan/ar-BB17M4iS

 

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Is there a mortgage crisis for British pensioners? New data show 83% of homeowners over-55 who need one can't get a homeloan

A staggering eight in 10 borrowers over 55 who expect to be able to renew their mortgage are being turned down by mortgage lenders, This is Money can reveal. 

A study carried out by broker Retirement Mortgage Service over the past year found that more than 30,000 retired borrowers got in touch with their advisers, with 2,540 making a full application to refinance their mortgage. 

But just 438 of these customers were able to refinance onto another mortgage, a retirement interest-only mortgage or a lifetime mortgage. 

The remaining 2,102 customers were met with the reality that they didn't qualify for any product that met their needs.  

While it's not a statistically significant poll, it nonetheless points to the likelihood that scores of older borrowers attempting to remortgage will have no choice but to lapse onto their lender's expensive standard variable rate, effectively making them mortgage prisoners. ...

...There are some mortgages designed with older borrowers in mind, but as the survey from Responsible Life illustrates, even these carry affordability rules which bar most people from accessing them.

This is particularly worrying for the thousands of interest-only mortgage holders who are set to see their loans mature with no repayment plan in place in the next few years – one in nine of whom are over 65 years of age.

It also spells trouble for any older borrower trying to use their home as security to borrow a lump sum, be it to help a loved one, make home improvements, or top up a regular income.

The evidence suggests that many of these borrowers are unaware that they will have difficulty accessing finance in their later years. RMS found that many over-55s applying for a mortgage were attempting to borrow at ratios of more than 10 times their guaranteed income.

Steve Wilkie of Responsible Life, parent company to RMS, said: 'Retirees are being frozen out of the mortgage market because they are being sabotaged by affordability rules that are not fit for purpose.

'The interaction between products and their features in the later life lending market must be urgently addressed if they are to meet societal needs. The country would feel a net benefit from improvements in these areas.'

What are the options?

Previously the only option for many older borrowers with mortgage debt they couldn't repay was to sell their home and hope they had enough equity to fund the purchase of a smaller property.

But with house prices having rocketed over the past 20 years, it's not always possible. This left thousands of borrowers unable to repay their loan, unable to remortgage and unable to afford to downsize....

...How will this affect interest-only borrowers?

While a lack of finance might force many borrowers onto their lenders'' standard variable rate, interest-only borrowers with no repayment plan in place risk losing their homes if they can't access a new loan.

According to the Financial Conduct Authority's most recent figures in 2018 there were 1.67million full interest-only and part capital repayment mortgage accounts outstanding in the UK. 

This amounts to around one in five outstanding mortgages. One in nine of these is held by over-55s, equal to around 185,370 households.

 

Does this signal the end of older home "owners" using their property as a cash cow?

Surely at this age, borrowers should not be surprised there is a limit as to what/where they can borrow?

I found some of these figures amazing, eg..the large amount of over 65 IO borrowers who have no repayment plans in place. Also that many over 55's are looking at borrowing ratios of more than 10 times their income! 

So I wonder why the "Responsible Life" spokesman would say the affordability rules were not fit for purpose? (VI reasons perhaps?)

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Maybe I have misread this but Isn’t this mainly about over 55s who have retired and cash in pension pots so don’t have an income to pay the mortgage?

Most people aren’t retired at age 55?

Edited by MARTINX9
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7 minutes ago, MARTINX9 said:

Maybe I have misread this but Isn’t this mainly about over 55s who have retired and cash in pension pots so don’t have an income to pay the mortgage?

Most people aren’t retired at age 55?

Then again if you have a large enough pension pot you might have enough to buy the property.

Another thing, if you are lucky enough to have a DB pension you have an income stream which is a good deal more secure than an employee.

A possible reason for getting turned down is that modern scourge the Credit Score.  Basically if you have never been in debt you don't have a credit score, so computer says no.  Older people tended to avoid debt (except mortgages) whereas it seems to be the way of life these days.  So they don't have a credit score.

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They can get a loan.....it may not been the loan they want (or need).....age 55 should ideally be ten years left on a repayment loan........a state pension will not cover a mortgage, neither will benefits.....many personal pensions won't either, they were not designed to cover debt payments, they are designed to cover living costs.?

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27 minutes ago, kzb said:

.

A possible reason for getting turned down is that modern scourge the Credit Score.  Basically if you have never been in debt you don't have a credit score, so computer says no.  Older people tended to avoid debt (except mortgages) whereas it seems to be the way of life these days.  So they don't have a credit score.

This cannot be the case for someone who has been paying a mortgage for years.

It's not that. What's happened is that the free money has ended.

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9 minutes ago, Si1 said:

This cannot be the case for someone who has been paying a mortgage for years.

It's not that. What's happened is that the free money has ended.

Not sure to be honest.  I just put it forward as a theory.  Certainly Martin Lewis is always banging on about credit scores and how you won't have a good one unless you have demonstrated you are a good debt junkie.

As to the free money ending, even the Tory PM has told us there is effectively free money, hence the spending splurge.  They can borrow money at below inflation rates.

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27 minutes ago, kzb said:

 They can borrow money at below inflation rates.

..Until they can't. 

If you are wealthy Elite, you will put money where it recovers fastest - AsiaPac, US, EU, MidEast, UK

US are desperate for conflict with China to push themselves as a safe haven...once money flows out of UK watch the rates jump

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33 minutes ago, kzb said:

Not sure to be honest.  I just put it forward as a theory.  Certainly Martin Lewis is always banging on about credit scores and how you won't have a good one unless you have demonstrated you are a good debt junkie.

As to the free money ending, even the Tory PM has told us there is effectively free money, hence the spending splurge.  They can borrow money at below inflation rates.

Is having a credit card debt?........ build up the debt over the month, get any deals, points or prizes, insurances and protection.......repay the whole lot interest free every month...... preferably by DD so don't have to think about it.....taken on payday every month........can still build up a good rating if accumulation of debt is your thing, other things can be cheaper not related to debt if have an excellent history with managing debt......

No good repaying something you consummed months or years ago when still consuming the same like food or fuel......that is not free money that is a compound of debt and debt interest,........will then require forever increasing compound of income with no gaps......like gaps in rental or investment income, gaps in work income is hyper magnified..........repaying yesterday's consumption ontop of todays.?

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i`m surprised people over 55 still have a mortgage. i`m surprised most have no savings also. 

all this seems alien to me, parents pay off home at age 46, retire before 50. 

sounds like the over 55`s are in a home they cannot afford. maybe they need to sell pay off all debts go into rented or buy a much smaller home. ;) 

 

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1 minute ago, longgone said:

i`m surprised people over 55 still have a mortgage. i`m surprised most have no savings also. 

all this seems alien to me, parents pay off home at age 46, retire before 50. 

sounds like the over 55`s are in a home they cannot afford. maybe they need to sell pay off all debts go into rented or buy a much smaller home. ;) 

 

I'm that age soon, and I wanted to remortgage later this year. Why have i got a mortgage?- divorce, I would guess 80% of people with mortgages in that age range are in that position

i would be looking for 12 years up to 67 when I can realistically retire. i have one of the most stable jobs in the country and between myself and my (2nd) wife our household income is in the top 1%. So I will let you know...

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22 minutes ago, debtlessmanc said:

I'm that age soon, and I wanted to remortgage later this year. Why have i got a mortgage?- divorce, I would guess 80% of people with mortgages in that age range are in that position

i would be looking for 12 years up to 67 when I can realistically retire. i have one of the most stable jobs in the country and between myself and my (2nd) wife our household income is in the top 1%. So I will let you know...

If that is true that 80% of over 55`s are divorced sort of begs the question why bother in the first place.  short term fake happiness for long term pain and hardship afterwards. 

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8 minutes ago, longgone said:

If that is true that 80% of over 55`s are divorced sort of begs the question why bother in the first place.  short term fake happiness for long term pain and hardship afterwards. 

Yeah, it’s a sad situation and I see my friend going through it now with others to follow I’m sure.  I remember meeting a well paid pharmacist in a pub and we got talking, wife had cleaned him out in the divorce and he was living in a bed sit broke and expected to be like that until the kids turned 18.  At that point he’d be thinking of starting a mortgage at 40 plus

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26 minutes ago, longgone said:

If that is true that 80% of over 55`s are divorced sort of begs the question why bother in the first place.  short term fake happiness for long term pain and hardship afterwards. 

sorry i would guess 80% of people with mortgages in the 55-70 range are divorced, not the same thing. i was mortgage free when i seperated from my ex age 46. the solution is to find a partner to support you... We are into narrow boating, i reckon most residential narrow boats in the country are occupited by 50 something divorced men.

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1 minute ago, debtlessmanc said:

, i reckon most residential narrow boats in the country are occupited by 50 something divorced men.

I believe there's a real classless cameraderie on the canal. I've met a few people, yeah likely single older blokes, who got an enormous amount of comfort and companionship from living on the canal.

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15 minutes ago, Si1 said:

I believe there's a real classless cameraderie on the canal. I've met a few people, yeah likely single older blokes, who got an enormous amount of comfort and companionship from living on the canal.

Indeed its fun and some of the meet ups are hilarious

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3 hours ago, satsuma said:

Yeah, it’s a sad situation and I see my friend going through it now with others to follow I’m sure.  I remember meeting a well paid pharmacist in a pub and we got talking, wife had cleaned him out in the divorce and he was living in a bed sit broke and expected to be like that until the kids turned 18.  At that point he’d be thinking of starting a mortgage at 40 plus

Someone I know has just gone through that however he still lives in the home and she has gone with the kids. Maybe the courts are not biased after all. I hope 40 is not too old for a mortgage considering I'm 43 next year.?

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3 hours ago, debtlessmanc said:

sorry i would guess 80% of people with mortgages in the 55-70 range are divorced, not the same thing. i was mortgage free when i seperated from my ex age 46. the solution is to find a partner to support you... We are into narrow boating, i reckon most residential narrow boats in the country are occupited by 50 something divorced men.

Honestly I'm more concerned About future income and buying Somewhere to live eventually than worrying about women.

Maybe the divorce Rate is a factor in that.

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35 minutes ago, longgone said:

Someone I know has just gone through that however he still lives in the home and she has gone with the kids. Maybe the courts are not biased after all. I hope 40 is not too old for a mortgage considering I'm 43 next year.?

The system favours mothers for custody and that is where the money goes. i paid my ex 700-1000 a month until or kids were 18, but that is just the start. I  paid for a holiday with them in the summer, for their laptops, now for their university accommodation. My ex straight away got a job (after 18 years of claiming she could not work, the first words she said to me were "i will always work" the first thing she did when we were married was stiop working) so child benefit, tax credits. When we seperated our joint income went up by £600 a month due to benefits we could not claim as a couple. I am now married to a wonderful 2nd wife who is calm, clever, an accomplished musician (as all her family are, relatives of Elgar) and a successful business woman. funny old world again.

Edited by debtlessmanc
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Relax. This is non news. This is about over 55’s REMORTGAGING, not taking out new mortgages. 

Remember, in the good old days, you got a 25 year mortgage with a bank/building society and stuck with them on their SVR......along with all the other mortgagees. 

All this flitting about trying to chase better rates with better LTV every 2 years and feeling hard done by if you don’t get a cheaper rate is a relatively new phenomenon (past 20 odd years)..... is it not?

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1 hour ago, debtlessmanc said:

The system favours mothers for custody and that is where the money goes. i paid my ex 700-1000 a month until or kids were 18, but that is just the start. I  paid for a holiday with them in the summer, for their laptops, now for their university accommodation. My ex straight away got a job (after 18 years of claiming she could not work, the first words she said to me were "i will always work" the first thing she did when we were married was stiop working) so child benefit, tax credits. When we seperated our joint income went up by £600 a month due to benefits we could not claim as a couple. I am now married to a wonderful 2nd wife who is calm, clever, an accomplished musician (as all her family are, relatives of Elgar) and a successful business woman. funny old world again.

Glad it worked out, gives me some hope for the rest, hate to think of my buddy sitting on his own of a night 

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9 hours ago, winkie said:

They can get a loan.....it may not been the loan they want (or need).....age 55 should ideally be ten years left on a repayment loan........a state pension will not cover a mortgage, neither will benefits.....many personal pensions won't either, they were not designed to cover debt payments, they are designed to cover living costs.?

It will vary institution by institution, but we had no issues changing product in 2017 to a five year fix, and in 2022 when it expires i will be 53, wife younger, but neither retired. But our B/S has a policy that existing borrowers can switch to any product available that is repayment based with just a fixed £300 fee and no new MMR. 

So I have no worries about changing and being forced into the SVR.

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